Wednesday, April 4, 2012

Miller Trust and Medicaid Planning

When doing Medicaid planning for nursing home care, it is important to consult an elder law attorney.  William Hayes, attorney has shared the following information for my blog.  He can be reached at http://www.hayeswilsonlaw.com and is a great resource for families and seniors.
 
 
Miller Trusts
What Is The Context?Older adults who need care in a skilled nursing facility often look to the Medicaid program for financial assistance. Medicaid is not available to everyone, however, because it is designed to be part of the safety net for the truly indigent. As result, a person with income per month over Medicaid’s monthly income limit will not be eligible. An annually adjusted number, the 2012 income limit is $2,094 per month (computed on a gross basis before any deductions). A Miller Trust (also known as a qualified income trust) is a technique used to make some or all of a person’s income not count each month, thereby allowing the person to satisfy the income eligibility test for Medicaid.
How Does A Miller Trust Work?A Miller Trust is an agreement that a person’s income will be placed each month into a trust account at a bank, credit union, or other financial institution. The trust agreement specifies the uses of the funds that go into the trust account each month, and states that any funds remaining in the account at the person’s death will be paid to the State of Texas to reimburse the state for what it has paid in Medicaid benefits on behalf of the individual.
What Are The Uses Of The Funds In The Miller Trust?First, $60 per month is set aside for the personal needs of the individual. Second, if there is a spouse who is not on Medicaid, funds may be diverted each month in an amount adequate to raise the spouse’s income to a minimum level deemed necessary for the spouse to live in the community. Third, health insurance or unpaid medical expenses for the last three months can be paid. The balance of the individual’s income each month will be paid to the skilled nursing facility, and then Medicaid will pay the facility the difference between the co-pay amount and the Medicaid reimbursement rate.
Is All Of An Individual’s Income Put Into The Miller Trust?All of any particular source of income is required to be put into the trust each month. If a person has three sources of income (social security, a pension, and an irrevocable annuity), and each pays $1,000 per month, it would be adequate for Medicaid eligibility purposes to route only one of those income streams into the trust each month, and then the person’s countable income for Medicaid purposes would only be $2,000 per month. As a practical matter, all of a person’s income is usually routed into the trust to make the co-pay calculation and payment a simple matter.
Does A Miller Trust Help Protect A Person’s AssetsNo, a Miller Trust only helps with the income eligibility test. Medicaid also has a limit of $2,000 on the maximum amount of countable resources that a person can own and still be eligible for Medicaid. There are various techniques to deal with excess assets, but a Miller Trust is not one of them. A Miller Trust is prohibited from receiving a transfer of assets.
For more information, Appendix XXXVI of the Texas Medicaid Eligibility Handbook goes into further details about Miller Trusts. See http://www.dads.state.tx.us/handbooks/mepd/appendix/XXXVI/index.htm

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